2008 (2) TMI 965

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....mount of penalty. While the revenue is in appeal against the setting aside the demand of Central Excise duty of Rs. 1.83 crores. Since both the appeals are arising out of the same impugned order they are being taken up and disposed by a common order. 2. Relevant facts that arise for consideration are that the appellant company i.e. L&T were manufacturing glass bottles falling under Chapter 70.07 of the Schedule to the CETA, 1985 and were availing Modvat credit in terms of the provisions of Rule 57A read with 57G of Central Excise Rules, 1944. Officers of DGCEI on an investigation, came to the conclusion that L&T have under-valued the clearance of glass bottled by not including cost of primary packing material supplied free of cost by ....

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....been followed by the Tribunal in series of judgments. It is his submission that the adjudicating authority was correct in dropping the demand which has been raised on this ground. As regards the confirmation of demand on the clearance of freshly manufactured bottles against duty paid bottles rejected by the customers, it is his submission that these rejected bottled were received by the appellant in their factory and due to the exigency and need of the customer, freshly manufactured bottles were cleared without payment of duty under provisions of Rule 173H(4) of the erstwhile Central Excise Rules, 1944. It is his submission that the rejected bottles which were received by the appellant from their customers, were in fact subsequently cleared....

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....ymers (supra) has very clearly held as under : Valuation - cost of packing not includible if goods are marketable without being packed, or contained in drums or containers when packing not necessary for completion of manufacture of excisable goods - No cost incurred for packing by manufacture - Goods in packed condition at the time of removal - cost of packing still not includible -Fusel Oil/Styrene Monomer - 90% supplies in Tankers and balance in customers drums - Cost of drums not includible in the value of Monomer - Section 4(4) of the Central Excises and Salt Act, 1944. 7. It is undisputed in this case that the packing material during the relevant period was supplied by the customers of L&T and if that be so, the issue is square....

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.... were found to be returnable to the customer after clearing and sorting only and did not need any further manufacturing process. Rule 173H(4) permits clearance without payment of duty paid goods received back into the factory which are removed from the factory without undergoing any process of manufacture. However, M/s. L&T instead of clearing the bottles received back, after clearing and sorting, actually cleared freshly manufactured bottles against receipt of the duty paid rejected bottles. Shri M.B.V. Krishna has clearly admitted this lapse in his statement. There is no provision in Central Excise Rules, for clearing without payment of duty of goods against return of duty paid goods into the factory. The demand for duty on this ground th....